The main legal point established in the judgment is the binding nature of the award passed by the Lok Adalat under Section 21(2) of the Legal Services Authorities Act and the duty of the court to encourage ADR systems.

P. JYOTHIMANI, J.

1. This Writ Petition has been preferred against the order of the Debt Recovery Tribunal by the Bank, in and by which the Tribunal, on the Application filed by the Bank for recording an award of settlement arrived at in a Lok Adalat conducted by the Tamil Nadu State Legal Services Authority under the provisions of the Legal Services Authorities Act, 1987, refused to record the compromise entered between the Bank and the borrower on the ground that there is no authority for the Officer concerned to sign the terms of settlement and to give a big waiver.

2. We have heard Mr. K. Rajasekaran, learned Counsel appearing for the Bank as well as Mr. B. Raviraja, learned Counsel appearing for the borrower/Second Respondent.

3. Both the Bank as well as the borrower, in a Lok Adalat conducted by the Tamil Nadu State Legal Services Authority, have arrived at a settlement and the same has been recorded by the Lok Adalat and a decree, in fact, has been passed as per Section 21 (2) of the Legal Services Authorities Act. It is also stated by Mr. B. Raviraja, learned Counsel appearing for the borrower/ Second Respondent that pursuant to the award passed by the Lok Adalat, the borrower has, in fact, made full payment. In such circumstances, the question to be considered in this Writ Petition is as to whether it was proper on the part of the Tribunal to virtually reject the compromise entered into between the parties in the manner known to law.

4. A reference to the contents of the impugned order passed by the Tribunal makes it very clear that the Tribunal has failed to understand the very concept of Lok Adalat settlement and the way in which the Tribunal has questioned the authority of the Officer in signing the Lok Adalat is anti-thesis to the very concept itself.

5. In this regard, it is relevant to extract some of the portions of the order of the Tribunal:

“It is not understood as to under whose authority Shri. S. Gopalsamy, the DGM signed the terms of settlement and whether he is having power to give such a big waiver. Directions are given to the Bank to produce his authority in this behalf before signing the consent terms before the Lok Adalat.”

6. The conducting of Lok Adalat has been statutorily recognized by the Act of Parliament under the Legal Services Authorities Act, 1987, by which the disputes between the parties are settled in the District Level, State Level and National Level by the Lok Adalat conducted as per the provisions of the Act by assigning the persons as contemplated therein. The Lok Adalat, when the matter is referred either by the parties themselves or through Court, gets cognizance of the case and arrive at a settlement after discussed with the parties. When such settlement has been arrived at, the Lok Adalat passes final order in the form of award and the said award passed by the Lok Adalat which is signed by the parties becomes a decree by itself, as it is stated under Section 21 of the Legal Services Authorities Act, which reads as follows:

“21. Award of Lok Adalat – (1) Every award of the Lok Adalat shall be deemed to be a decree of a Civil Court, as the case may be an order of any other Court and where a compromise or settlement has been arrived at, by a Lok Adalat in a case referred to it under sub-section (1) of Section 20, the Court fee paid in such case shall be refunded in the manner provided under the Court Fees Act, 1870 (7 of 1870):

(2) Every award made by a Lok Adalat shall be final and binding on all the parties to the dispute, and no Appeal shall lie to any Court against the award.”

7. In fact, even the matter which is not before the Court can be referred to by the parties before the Lok Adalat by way of pre-litigation Lok Adalat settlement in the Alternate Dispute Resolution concept. In which event, the award passed by the Lok Adalat, automatically becomes a decree executable in nature. In cases where the matter is referred by the Court, then the Court retains the jurisdict